[nubly]

the company i work for got bought out last year and just recently started a 401k. i decided to go into it as soon as they offered it by putting in $90 a pay period. its been 5 pay periods and i've lost about $50. now $50 isnt that much but on my CDs at my bank i'm earning $10 interest a month on one and $20 on another one. even my savings account is earning more at $1 a month.

is it even worth it to have a 401k when the economy is so bad? the rep told us not to worry when the mony goes down because it'll eventually go up again but i just keep on thinking that im putting in money for no reason. im thinking of just starting up another CD account.

 

[WineKitty]

That is surprising since the market has been steadily moving up of late.

Most people have taken it in the neck with the market in recent times. However, the market has moved slowly and steadily moved up over the last six months.

Who is the 401K with? Does your employer have a matching plan?

Dont expect to see great returns in 5 payperiods. You are in it for the long haul with 401Ks.

I personally like Roths better but there is a limit to what you can put into a Roth. I think its $5000 but dont quote me on that. With a 401K you arent paying taxes on it and that will reduce your tax load. Also, a 401K is taken directly from your paycheck so you put that money right into savings without ever having the chance to spend it.

Give the 401K time.

Its important to know what 401K you are in; all 401kS are not the same.

I choose managed funds because I really dont have the time or energy to spend my life learning every aspect of investing. Yes, one could call me lazy I guess but I dont think I have done too bad. I lost a good deal of money when the crash happened but I kept putting money in when it was low and I have recovered nicely since then.

The better time to put money in was a few months ago. Its still good though. I see the market going up for a while.

Bear in mind that you cannot take money out of the 401K for a long time. You can roll it over into something else but taking the money out will cost you greatly.

 

[MissMay1977]

I have a 401k with my company and my company matches my 6%. I have mine diversified and I am doing ok.

 

[WineKitty]

When I responded to this thread, there was only one post--Nubly's. My post was in no way a response to yours Tony.

I agree with you wholeheartedly that having a proactive approach is a very smart one. As I said, all 401Ks arent the same.

I would say for the novice (like me watching CNBC or reading Cramer is a good beginning but I lost quite a bit of faith in both when the market plummeted. Its a good place to start though, with that I will agree with you.

 

[nubly]

my company only matches 6%. the rep said that you dont see many companies that match everything like they used to.

 

[WineKitty]

my company only matches 6%. the rep said that you dont see many companies that match everything like they used to.

That isnt bad though. What kind of match? I get .50 cents on the dollar.

I get up to 6% also but I put in currently 20%. And with the market movement of late I am glad that I bumped it up.

 

[Jnmcda0]

I think it is good to put in a little each week. It is called "dollar cost averaging". If the market goes down and you keep adding each week, your average cost will go down and you'll get a higher return when it goes back up. If the market goes up, your average cost will go up, but you'll be making money.

 

[OneIsALonelyNumber]

I have a 401k. I got burned when the market crashed in 2008, but that's life.

I'm amazed you lost money recently. The market has gone up and up since March or so.

Your company match is 6%, which is fantastic if they are matching dollar-for-dollar. For those of you not familiar with 401k, a match of 6% means that if you put 6% of your paycheck into a 401k, the company will put in an equal amount. Free money!

Which mutual fund are you putting money into? I would recommend an index fund. They have lower costs than managed funds and outperform managed funds the majority of the time. If your company uses Fidelity, the S&P 500 index fund is FUSEX ("Spartan US Equity Fund"); for Vanguard, it's VFINX ("Vanguard Index Trust 500 Index").

 

[OneIsALonelyNumber]

I personally like Roths better but there is a limit to what you can put into a Roth. I think its $5000 but dont quote me on that. With a 401K you arent paying taxes on it and that will reduce your tax load. Also, a 401K is taken directly from your paycheck so you put that money right into savings without ever having the chance to spend it.

The Roth is tempting... but it is only good if your retirement income puts you in the same tax rate (or a higher tax rate) than your current tax rate. You're also banking that the government won't change the tax system drastically; for example, by replacing the income tax with a "fair tax" (national sales tax).

This is the best tool I've found to determine if you should use a traditional or a roth 401k:

http://scrs.schwab.com/tools/schwab_roth_401k_calc.htm

I decided to go with the traditional 401k because I plan/hope to retire at age 55. Since I will be retiring so early, I'll have to tighten my belt, which means I may be in a lower tax bracket than I am now.

Edit: hm... just realized WineKitty changed her name. But I think I know what her old name was!

 

[mountain5]

I put a lot of money into my 401k, 15% of my before tax salary plus 6% company match.

Ultimately, I'm fairly optimistic that I'll get a decent return over time. What I'm concerned about is that I can't really touch the money until retirement age, though I think it's possible to take money out after a substantial fee.

What I don't like is when people try to sell it as elementary compound interest, i.e. they ask you to think about the stock market like a bank account that returns 10% every year. That might be true in an abstract sense over many decades, but it's dangerous to think of it that way.

A couple months ago I opened an account with an online broker on the side, and put about $3000 into some tech stocks that I thought were undervalued. If I cashed out now I'd make about 500 bucks. That's not too shabby, though it could be one time beginner's luck.

That doesn't include my employer's stock, that's gone up almost 50% since I started deducting from my paycheck to buy it.

 

[nubly]

the thought of retirement scares me because i dont know how i'll be financially. even with a 401k or other forms of savings how will i know i'll have enough to live off of? im hoping that a store like wal-mart will still exist when im in my 70s so i can have a job as a greeter and live off my savings and whatever wal-mart will be paying (and possibly SSN if its still around)